Sensex, Nifty staring at deep cuts on Syria worries, rupee key

Indian markets are staring at another big down day with the Nifty futures on the Singapore Exchange indicating a 1.35 per cent cut right at the open. The BSE Sensex, which plunged 590 points on Tuesday tracking a record low rupee, may also witness similar cuts.

The rupee will be the key. The partially convertible currency closed at 65.24 on Tuesday, near the all-time low of 65.30. That is unlikely to give any confidence to traders.

The rupee posted its biggest single-day fall in nearly 18 years yesterday, a day after the lower house of Parliament approved a nearly $ 20 billion plan to provide cheap grain to the poor, raising concerns the fiscal deficit will blow out even further.

But even as rupee holds centre stage, other factors — mainly global – may influence trade today. Among them are the growing concerns over a military intervention in Syria, which not only hit global markets on Tuesday, but also lifted oil and gold prices.

At times of uncertainty, investors often move out of perceived risky assets such as stocks and into supposedly safe havens such as gold.

The Syrian crisis comes even as emerging markets have been reeling for the past few weeks on expectations that the U.S. Federal Reserve will reduce its $ 85 billion a month bond-buying programme as soon as next month.